Do I have to report proceeds from my X husband’s wrongful death settlement on the FARFSA Application as AGI?

We are not sure – check with your CPA and Attorney – Here’s our research on this

Death-settlement tax implications

Dear Tax Talk:
I have a lawsuit related to the death of my husband. I should receive a large settlement. Will it be taxable? How much of it can I give to the children without paying tax? I know that at least 60 percent of the money is said to be for pain and suffering, but I’m not sure of the rest. Please answer as soon as you can as I have already started receiving some of the money.
Thank you,Jeanette

Dear Jeanette:
Generally, a recovery in a lawsuit for pain and suffering for the death of an individual is tax-free. You don’t indicate what the remaining portion of the settlement relates to, so I can only tell you that if the amount is for punitive damages, it would be taxable. If the amount relates to lost wages it would be tax-free. Your attorney should be able to provide you better guidance on the tax implications.

If your children are not a party to the wrongful death action, then you would basically be making a gift to them. You can make a gift to each one of your children of up to $11,000 annually without gift tax implications. If you have three children, you can give $33,000 in 2002 and $33,000 in 2003. Source

What assets and Income are looked at when scholarships, loans and grants are applied for?

What assets do Scholarship Boards check out?

See response at Saving For College.com

Here are some sample questions – taken from our brief survey on the net.

Include a description of your financial need

How do you plan to finance your college education?
What records do I need to fill out the financial aid form?

You or your parents can’t get any financial aid because your family income is too high.
False. Income is only one of the criteria on which financial aid is based. If the school’s costs exceed your family’s means, you may qualify for some form of financial aid (grants, work-study, or loans). Also some scholarships are based on merit.

Other taxable income (alimony received, business and farm income, capital gains, pensions, annuities, rents, unemployment compensation, Social Security, Railroad Retirement, and all other taxable income)